Is Eurozone Ceding Sovereignty?

With the deterioration in European economies spiraling, increasingly evident in yesterday's weak PMI data, the main idea of politicos is further political integration. What was initially proposed by Angela Merkel is now gaining traction amongst other politicians, with Mariano Rajoy of Spain remarking, “EU countries must accept to give up sovereignty.” The worsening PMI figures in Germany are especially worrying as the slump in the auto market could indicate that the country is facing a possible recession. Weaker data was not enough to send equities and bonds into a tailspin as periphery yields touched their lowest levels in years and indices broadly rallied. The French CAC 40 rallied 3.58% while the Swiss SMI and German DAX rose 2.54% and 2.41% respectively. EUR/USD meanwhile has fallen back below the 1.30 handle.

Economic News

- Eurozone Ceding Sovereignty?

With the deterioration in European economies spiraling, increasingly evident in yesterday's weak PMI data, the main idea of politicos is further political integration.

What was initially proposed by Angela Merkel is now gaining traction amongst other politicians, with Mariano Rajoy of Spain remarking, “EU countries must accept to give up sovereignty.” The worsening PMI figures in Germany are especially worrying as the slump in the auto market could indicate that the country is facing a possible recession. Weaker data was not enough to send equities and bonds into a tailspin as periphery yields touched their lowest levels in years and indices broadly rallied.

The French CAC 40 rallied 3.58% while the Swiss SMI and German DAX rose 2.54% and 2.41% respectively. EUR/USD meanwhile has fallen back below the 1.30 handle.

Inflation in Australia came in relatively subdued, further raising speculation that the Reserve Bank of Australia will keep a rate cut in the pipeline. The CPI figures showed the softest price growth in 14-years and coupled with the drop in commodity prices the Australian dollar is trading weaker against peers, down -0.15% against the dollar. Overnight, the Reserve Bank of New Zealand kept the benchmark interest rate on hold at 2.50%, but maintained the position that the Kiwi-dollar remains overvalued. NZD/USD is trading substantially higher, rising 0.60% to 0.8449. USD/JPY is pushing the 100 handle, trading at 996.00 while the Nikkei outperforms peers, gaining 2.32%. The Australian ASX has increased 1.72% while the Hang Seng lags slightly, adding 1.64%.

Aside from the brief market disruption caused by the hacking of the Associated Press (AP) twitter account, risk assets in the U.S. continued to gain. However, the gain in risk assets also saw a modest corresponding rise in U.S. treasuries and auctions better bid with lower yields than prior issues. New home sales came in stronger than the prior number, however, failed to top expectations of 420,000 new homes sold in the month of March. The major development was the possible introduction of a sales tax for online transactions which internet retailers are vehemently trying to avoid as the margin compression could spell disaster. Benchmark indices rose broadly, with the Nasdaq climbing 1.11%. The Dow Jones gained 1.05% while the S&P 500 increased 1.04%.